HCMC court drops Uber’s lawsuit against tax demand

An Uber driver takes a client on a motorcycle in Hanoi, Vietnam November 28, 2017. Photo by Reuters

The Netherlands firm will have to continue paying the tax.

A court in Ho Chi Minh City has dismissed a lawsuit against the city’s tax department by Uber after the ride-hailing firm asked the court to stop the department from charging it with a million-dollar sum of tax.

The HCMC's tax department earlier asked five local commercial banks to help collect more than VND53 billion ($2.34 million) of what it believed was back taxes from Uber between January 1 and 10 of 2017.

Instead, Uber Vietnam, a subsidiary of Uber International Services Holding B.V. based in the Netherlands, then filed a lawsuit against the department.

On December 29, the department received an emergency notice from the court, saying that its collection of tax from Uber would be put on hold.

The court has since dropped the lawsuit because Uber Vietnam “does not have the required legal status for such a case.”

At the same time, it has also removed the suspension on tax collection, a source from the department told VnExpress on Wednesday.

“With this new decision from the court, the HCMC’s Tax Department will continue to force Uber to pay tax by asking for help from commercial banks,” said an official from the department who wished to remain anonymous.

Specifically, Uber will have to transfer its income into the bank accounts of the tax department instead of handing it over to its headquarters in the Netherlands as it has been doing so far.

This process will last until the tax authorities collect enough $2.34 million in tax from the company.

In September, the department ordered Uber to pay VND66.7 billion of back taxes and tax evasion penalties by December 23.

But the company has only paid VND13.3 billion. It has complained to Vietnam’s Ministry of Finance that it is not subject to paying taxes according to Vietnam’s agreement on double taxation avoidance with the Netherlands, where it is based.

Uber International Services Holding B.V. has been repeatedly accused of tax evasion since bringing its ride-hailing business to Vietnam in mid-2014.

Yet Vietnam’s finance ministry said the company has to pay taxes for the income it generates in Vietnam.

Traditional taxi companies in Vietnam have used the tax issues to accuse Uber and Grab for putting up unhealthy competition.